When a sale of a property located in Spanish territory, by a non-resident taxpayer in Spain occurs, the purchaser has the obligation to withhold and pay 3% of the purchase price of the property, as an advanced payment on account of the taxes of the non-resident seller. In other words, this 3% is a prepayment on the potential capital gain tax in Spain.
Please note that this is an obligation on the buyer, who is bound to the presentation of the form 211, for deposit of the 3% retention at the Spanish Inland Revenue, within one month from the date of transfer of the property.
Once the deposit or payment has been made, the purchaser will provide the seller with the form 211, “copy for the vendor non-resident”, to justify the deposit of the retention with the Tax Authorities in Spain.
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